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It is important to understand how sales tax and/ or gross sales receipt tax can affect your business in the state that you elect to organize your LLC or form your corporation. Sales tax will as the name implies very simply put affect the customers and clients that you do business with while the responsibility for paying the gross receipts tax based upon your gross revenue will be yours as the member or shareholder of your LLC or corporation respectively. While 45 states impose a sales tax, the 10 states of Alabama, Florida, Delaware, Hawaii, Illinois, New Mexico, Ohio, Pennsylvania, Texas, and Washington collect gross receipt taxes. None of the 6 states below have income taxes for small LLC’s and Corporations.
Delaware:
Sales Tax:
Delaware is one of the five states without a sales tax.
Gross Receipts Tax:
Depending on the type of business gross receipts tax rates range from 0.096% to 1.92%.
Florida:
Sales Tax:
The base sales tax is 6% and can be as high as 7.5% depending on the specific municipality.
Gross Receipts Tax:
A tax of 2.5% is collected on only gross receipts from the sale, delivery, or transportation of natural gas, manufactured gas, or electricity to retail consumers based in Florida.
Montana:
Sales Tax:
Montana is one of the five states without sales tax.
Gross Receipts Tax:
Montana does not have a gross receipts tax.
Nevada:
Sales Tax:
The base rate is 4.6% and can be as high as 8.15% depending on the municipality.
Gross Receipts Tax:
Nevada does not have a Gross Receipts Tax.
Texas:
Sales Tax:
The base sales tax rate is 6.25% and can be as high as 8.25% depending on the municipality.
Gross Receipts Tax:
According to The Tax Foundation, amongst others, Texas has a gross receipts tax despite labeled as a franchise tax. It is collected based on a business's "taxable margin," from the lowest of three categories: gross receipts minus cost of goods sold; gross receipts minus compensation paid to employees; of 70 percent of gross receipts. The tax is basically 1 percent of taxable margin, and 0.5 percent for qualifying wholesalers and retailers.
Wyoming:
Sales Tax:
The base rate is 4% and can be as high as 6% depending on the municipality.
Gross Receipts Tax:
Wyoming does not have a Gross Receipts Tax
